Australian Dollar Speculators Finally Try the Long Side

It has been a long time since the speculators have tried the long side of the Australian Dollar. Their short position dates back to the fall of 2013 when the macroeconomic players decided the coming Chinese slow down would decimate the Australian economy. This of course might still happen, but it takes a very long time until changing price or policies can result in economic change.

The speculative selling did work for a while as the bears piled on. Their biggest position was around the end of January. With the total position was up to a record 86,862 contracts the A$ was trading under .87. Specs are now getting long with the price around .96. Their position is small as is the total size of the Aussie market at present. It will not take much buying or selling to push the market either way.

Trade in the pound is noteworthy as the OI continues to grow because of spec buying. The total long pound position is now up to 62K. The longs are lined up hoping the market can conquer the top side of 1.68. Any bear numbers might give us a pull back.

The yen short position did not liquidate as we had anticipated. It remains a very large 118K down from last week’s 122.6. As noted in a previous report, the 200 day SMA is slightly under the 101 handle so we may be approaching some support.

• US Dollar Index: Large specs flipped to the long side of the DI joining the small specs who had already had an unbalanced long. The small spec is currently a 4.5 to 1 ratio long in the DI. Small specs are not the major players in this market but recently the large spec position has been evenly balanced.

• Euro (EUR/USD): There was little position movement during the period. Large specs have been long the euro while the small specs have been short. The total long position was reduced from 14.5K to 2.4K. The option trade represents about 6.7% of the 293K OI.

• British Pound Sterling (GBP/USD): The OI climbed about 11K as the large specs added to their pound long positions. Small specs are also long and between the two spec pound longs are up to 62K contracts from 46K last week. There was option liquidation but the total spreading category remains at 3%. The last day in the reporting period for this report was a strong bullish day for the pound. It has been since consolidating the gains.

• Japanese Yen (JPY/USD): Though there was some liquidation in the OI, the spec short position remains very large. Last week the spec short was 122.6 and the short has been reduced to 118K. The large spec is an 8 to 1 ratio short. Since the cut-off date for this report the yen has been trading higher versus the USD.

• Swiss Franc (CHF/USD): Specs remain long the SF but did reduce their position during the period. They are now long 11.7K versus 17.6K last week. The SF continued to strengthen after the closing date of this report.

• Canadian Dollar (CAD/USD): Speculators continue to hold the second largest long USD position versus another currency short in the loonie. The total C$ short was reduced to 43.5K from 49L. Market action did little to improve the short C$ in the period. The option trade is unusually large in the C$.

• New Zealand Dollar (NZD/USD): Large specs continue to add to their long Kiwi position. They are approaching a 4 to 1 long. With the modest small spec long the total net long is up to 31.8K. This is a very large position on one side of the market that only has 33K OI.

• Australian Dollar (AUD/USD): Buying by the large specs resulted in switching their position to the long side. This also resulted in flipping the total spec position to the long side of the Aussie for the first times in months. Small specs remained short the Aussie but the total spec net position is now long 1.3K contracts. The total OI remains small, only 110K contracts. Option trade, however, is large.

Currency Commitments of Traders with Delta-adjusted Options and Futures Combined, data through April 8, 2014.